A widow and her two daughters own a 3,000 square meters land with three storey building that has 12 residential apartments in Metro Manila. The building was constructed in the early 80's. Although the structure is still good, it has not been renovated since her husband died five years after its construction. The property's earning dropped through the years because occupancy rate has decreased through time due to lessee complaints on various problems that require major renovation such as electrical, water pipings, windows sealing, flooring, ceiling, and external paint. The owners are "jobless spenders" and the earnings of the property is not enough for them and their expanded/extended families.
On time two decently looking persons visited the owner of the property and offered her a joint venture. These people claim to be a team of real estate agents who specialize in negotiating joint venture agreements. Under the joint venture that they propose, they have a developer who will build twenty-storey building on the land and the land-owner will get three floors (floors #6-8) and half of the commercial spaces in ground floor, plus parking spaces. The proposed building will occupy a bigger area of the land and will make six apartments per floor. In short, in the joint venture proposal, the owner will get eighteen brand new apartment units, three units of commercial spaces, and twenty-one parking units. Construction will be completed in one year.
The proposal was very attractive. The owner agreed to it in principle.
Then after a week, the two agents came back and said that they just came from a meeting with Developer. The agents said that the Developer would not invest in any Condominium Construction if there is still a structure on it. The agents expressed willingness to invest their own money to shoulder one-third of the Three Million Pesos cost of demolition just to pave the way for the Developer to sign-up. The agents proposed to the owner to invest the second-half of the cost of demolition and the demolition must be completed as soon as possible because the Developer would like to see the property and sign-up within 60 days.
The demolition cost sharing proposal was very attractive. The owner agreed to it. After thirty days, the demolition started.
After a week of demolition, the most walls of the building have already been demolished. The owner then gave the agents Two Million Pesos cash to continue the demolition.
The following day, the demolition team arrived and was claiming payment of the first tranch of the demolition contract. On that day, the agents disappeared and never came back.
IN THE END, the owner lost the income of the 12 apartments. They also lost Two Million Pesos Cash to the agents who swindled it. They owe the demolition company Three Million Pesos. They now live with a distant relative in the province, her daughters now work as overseas domestic helpers. From riches to rags, my deepest sympathy. I clearly understand the owners' wish to keep their identities secret to avoid embarassment of their stupidity, pride is the only thing that is left of them.
The owner have no information about the true identities and whereabouts of the two agents who swindled them. I will call this a Demolition Joint Venture Anomaly.
Right now, ninety-five percent of real estate agents in the Philippines are unlicensed. Some of them are good, as good as the licensed agents and sometimes even better; but most of them are crooks.
This is one of the hazardous results when government is soft in implementing the Real Estate Service Act of 2009.
Before you get into joint venture agreements, it is worth to spend a little for the a LICENSED real estate broker to represent you.